The open sourcing of financial services has been bubbling for a decade, and now that regulations are forcing this onto the large institutions, 2018 will be a big year for doing digital properly and becoming an Open Bank. Can they rise up and do something amazing to innovate and pit themselves against the fintechs and hold onto their large customer bases, or will they lose them to Monzo, Starling or N26 as they scale? Can the digital challenger banks such as Monzo, Starling, N26 and Atom get significant growth next year following all the good work they’ve done this year - is 2018 the year neo banks go mainstream? Equally, can they follow N26’s model of taking early adopters from multiple regions rather than just staying in the UK? “Will we get digital banking to 2% finished?” - David Brear Many banks are waking up to more and more challenges in digitalising their operations, and this will be even more pressured in 2018 thanks to the arrival of Open APIs under the Payment Services Directive 2 (PSD2) and Open Banking in the UK in January. Is 2018 the year the empire strikes back? Have the banks really done enough to establish themselves against the challengers, asks David Brear. Likewise, this could give non-banking players such as Facebook, Amazon, Google and Apple opportunities to harness their huge volumes of data to personalise their services and offer new ones. If they are already trying to do as little as possible to adhere to the minimum requirements it’s not a good sign and means they definitely will not be maximising the opportunities open banking could bring." "Open Banking looks like it will disappointing from big banks, as they look on course to under-deliver, despite the hype." On the flipside, fintechs are better placed and very keen to take advantage of APIs as a result of more open data sharing, allowing them to look into whatever opportunities they can gain from open banking. David Brear: "Open Banking looks like it will disappointing from big banks as they look on course to under-deliver, despite the hype. ![]() ![]() Additionally, banks have been given a reprieve till 2019 to roll out the most stringent rules of the new legislation. It is already clear that change will not be immediate, 5 big banks including RBS, HSBC, Santander, Barclays and the Bank of Ireland, have already stated that they will not be meeting the time scales. The benefits to the consumer are huge, but possibly they are not aware of them - there hasn’t been enough education yet informing and empowering customers of the coming changes. Banks will have to share their customers’ financial data and make payments on request, which transforms the traditional banking model. ![]() Customers will have greater access to their own data and can allow third parties to make payments on their behalf, massively changing the current model. Open Banking & PSD2 This is the big one that everyone is looking ahead to in 2018, when the legislation comes in on 13th January.
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